Tax regulations

Crypto Trader Profiles Change With New Tax Regulations

Indian crypto exchanges expect to see a different profile for crypto traders after the government announced a new 1% TDS tax on every crypto exchange, a 30% tax on winnings and other rules which will come into effect from July 1.

Rather than young, high-volume crypto traders, HNIs should take a bigger slice of the pie.

While HNIs tend to invest much larger sums, they also drift towards more secure coins such as Bitcoin or Ethereum, rather than the newer projects that have seen growth in the Indian crypto ecosystem.

Moreover, HNIs also tend to hold onto their investments longer, whereas the current ecosystem is well known for large trading volumes and small investment sizes.

Talk to Economic periodSathvik Viswanath, CEO of cryptocurrency exchange Unocoin, said: “Some smaller retail investors would pull out of the crypto industry itself just because they would have the burden of filing their returns by the end of the current fiscal year.”

He added: “HNI investors now have more clarity compared to young people.”

Meanwhile, Nishcal Shetty of WazirX created a Twitter thread about the dangers of the 1% tax in March, while Ashish Singhal of CoinSwitchKuber released a comprehensive rebuttal of the new laws at the start of the new fiscal year.

Singhal’s criticisms include the higher TDS per transaction for the required purpose of tracking crypto transactions. Moreover, he said, a 30% tax on cryptos is unfair to investors without the deductions provided for stock market investors, and Indians have already spent $6 billion on cryptos, which are now under threat.

Singhal added that the promotion of the crypto ecosystem would be “in line with the mission of the government of Atmanirbhar Bharat”.

Ram Mohan Naidu, the MP for Srikakulam, Andhra Pradesh, also posted on his Twitter last week about his meeting with Singhal and Sumit Gupta of CoinDCX talk about regulation from a private and public perspective to improve the local crypto ecosystem.

However, despite these complaints and the progress made by industry and government, Nischal reflected the opinion of the ecosystem by tweeting about how the whole episode feels like a joke.

He wrote on Twitter: “The new crypto tax law imposed on a country with the largest population of young people is hard to believe. Most people want to think it’s an April Fool’s joke from the Indian government .”